During that quarter, not much changed to warrant a near 21% swing in returns. The investors who bought virtually identical shares more cheaply did better than those who bought the shares at a higher price. I think Thor Industries Inc. is a very compelling investment at current prices. Additionally, if earnings collapsed, the shares would remain reasonably priced in my view. Additionally, insiders are “talking with their wallets”, and have spent just under $2.3 million of their own money buying stock over the past three months.
- THOR Industries, Inc. designs, manufactures, and sells recreational vehicles (RVs), and related parts and accessories in the United States, Canada, and Europe.
- A hold rating indicates that analysts believe investors should maintain any existing positions they have in THO, but not buy additional shares or sell existing shares.
- If I sell these, and the shares remain above $60 over the next six months, I’ll simply add $2,600 to the $3,175 already earned from selling puts on this name.
At the same time, the stock is trading at levels lower than when I became bullish on the name previously. It seems that my bullishness is echoed by insiders who’ve just spent nearly $2.3 million buying shares for themselves. Finally, I’ll be expanding the whiskey acquisition fund with more short put options, and I would recommend this or a similar trade. The competitive position in the RV industry is determined by factors such as price, design, quality, and service. Thanks to THOR’s dominant market position, the quality of its products, warranty coverage, and service allows the company to compete favorably with retail purchasers. While we are not dependent on any one supplier, we do depend on a consistent supply of chassis from a limited number of chassis suppliers.
This further negatively impacts our production schedule and cost structure as we try to balance our production and personnel staffing levels and schedules to the available chassis, often with short notice. This strategy has propelled THOR Industries momentum trading risks to the number-one market position in both North America and Europe. The company’s combined market share in 2022 in the United States and Canada was approximately 41.9% for travel trailers and fifth wheels, and around 49.4% in the motorhomes segment.
Analyzing Thor’s Strategic Clearance: Analyst Sees Measured Production Rebound Ahead
I also calculated the Sales/Capital Ratio, which tells me how much capital the company must have invested to generate each year’s revenue. It means that for every $1 of Invested Capital, it generates $3.50 in Sales. This number I am going to use to forecast future capital requirements for funding the growth of the company. I believe, that cyclicality is an inherent feature of this business and given the experience of the management and their profitable history during the down part of the cycle, this is not an issue that disqualifies this investment. I see these problems as an opportunity the market offers to the long-term investor to misprice the stock. One must only incorporate these short-term headwinds into the valuation model accordingly.
- It also illustrates why the long-term debt grew during this time from zero to $1.75 billion.
- Firstly, I analyze the past to understand the past capital allocation strategy of the company, what Return on Invested Capital (ROIC) the company achieved, and how much it reinvested to grow.
- MarketRank is calculated as an average of available category scores, with extra weight given to analysis and valuation.
- Some of you who follow me regularly know that it’s at this point in the article where I turn into a real downer because I start yammering on about how companies you like can be terrible investments if you overpay for them.
- Data may be intentionally delayed pursuant to supplier requirements.
The company is scheduled to release its next quarterly earnings announcement on Wednesday, December 6th 2023. According to 7 analysts, the average rating for THO stock is “Hold.” The 12-month stock price forecast is $92.86, which is an increase of 2.44% from the latest price. In my previous missives on this name, I recommended selling put options.
Thor Industries Cuts Guidance as Demand for Recreational Vehicles Cools
The company produces a wide range of recreational vehicles in the United States and Europe, which it sells to independent, non-franchise dealers along with related parts and accessories. Since going public in 1984, THOR Industries has achieved significant growth through a combination of organic growth, strategic acquisitions, and resulting from them efficiency improvements. Investors are generally more interested in the future, though, for obvious reasons. One of the things that’ll impact the future of a given stock is the sustainability of its dividend.
Short Interest (09/29/
Finally, I think the dividend is reasonably well covered for the next few years. For those who are skittish about buying at current prices because of fears of a market correction, I would recommend selling the puts described above or a similar trade. For my part, I’ll be both buying stock and selling puts, and I think investors who do either or both will be glad they did.
Thor Industries Q2 net of 50c misses Wall St. estimate of 99c; shares drop 9% in premarket
THOR Industries’ business model is focused on flexibility and adaptability to changing market conditions. The company doesn’t engage in heavy manufacturing that would require higher working capital investments and higher overhead costs but rather focuses on assembly. The Price-to-Earnings (or P/E) ratio is a commonly used tool for valuing a company. It’s calculated by dividing the current share price by the earnings per share (or EPS). It can also be calculated by dividing the company’s Market Cap by the Net Profit. THO, +2.29% late Tuesday said its board has authorized a 7% dividend increase to 48 cents a share.
Growth Strategy Focused On Acquisitions
Because I’m downright obsessed with making your lives easier, I want to spend some time writing about the dividend. As previously mentioned, THOR experiences cyclicality in the demand for its products and is highly dependable on the ability of its suppliers to provide necessary components. Moreover, high inflation and the rising production costs for new vehicles, in my view, could depress margins and make it impossible to pass all cost increases on to the end customers. The more attractive spread in the prices for used RVs compared to new ones could make consumers purchase used products instead of the new ones as they would offer a better value proposition for them.
Some put writers don’t want to actually buy the stock – they simply want to collect premia. Such investors care more about maximizing their income and will be less discriminating about which stock they sell puts on. I like my sleep far too much to sell puts based only on the income I can generate. I’m so much of a coward that I’m only willing to sell puts on companies I’m willing to buy at prices I’m willing to pay. I wasn’t always so disciplined, but after painful losses, I decided to only ever sell puts on quality companies at prices I was willing to pay.
To calculate Free Cash Flow, I add back Depreciation and Amortization as non-cash expenses and take into account yearly changes in Working Capital. Finally, I subtract Capital Investments made to sustain fp markets forex broker review business operations, market position, and fund growth. I believe, that this decentralized business model has many advantages that allow THOR Industries to generate a high return on invested capital.
THOR Industries, Inc. designs, manufactures, and sells recreational vehicles (RVs), and related parts and accessories in the United States, Canada, and Europe. The company offers travel trailers; gasoline and diesel Class A, Class B, and Class C motorhomes; conventional travel trailers and fifth wheels; luxury fifth wheels; and motorcaravans, caravans, campervans, and urban vehicles. It also provides aluminum extrusion and specialized component products to RV and other manufacturers. The company provides its products through independent and non-franchise dealers.
The company provided EPS guidance of $6.25-$7.25 for the period, compared to the consensus estimate of $7.12. The company issued revenue guidance of $10.50 billion-$11.00 billion, compared to the consensus revenue estimate of $10.81 billion. THO, -3.33% rose 1.5% in premarket trading Tuesday, itrader review after the recreational vehicle company reported fiscal third-quarter profit that dropped sharply but was well above e… It means that by reinvesting and growing the company is creating value – economic profit. This is a well-run company worth taking a deeper dive into the valuation.
Today, the THOR Family of Companies is the world’s largest manufacturer of recreational vehicles. THOR Industries is well-positioned to harness many new opportunities to grow in the RV market. The calculated intrinsic value of $134/share suggests that the company is significantly undervalued, thus providing a potential investment opportunity for long-term value investors.
Finally, I use management estimates and information learned from research to estimate future cash flows to calculate the intrinsic value of the company using Discounted Cash Flow Model. Another risk factor is that, one of the dealers, FreedomRoads, in each of the last three years, accounted for more than 10% of the company’s net sales. In 2020, 2021, and 2022 it was responsible for 15%, 13%, and 13% of revenue respectively. Another area of future growth opportunities in the North American aftermarket and service business, where the management sees a $2 billion TAM for its products.
Investors of record on Wednesday, November 1st will be paid a dividend of $0.48 per share on Friday, November 10th. This is a positive change from the stock’s previous quarterly dividend of $0.45. I am forecasting the 2023 NOPAT using the management’s guidance, and for the next years, I will use the average historical NOPAT Margin and grow them over time as I expect it to be higher in the future when the company matures.